CL King

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C.L. King & Associates - Concept of Financial Management

Financial management is a field that deals with management of monetary resources of an organization with the objective of wealth maximization of its stakeholders and achievement of the organization's objectives. A financial manager plans and directs the financial resources of the organization through its various operations. It is one of the most important and critical functions of the business. A financial manager is highly trained through a finance degree. A person interested in a career in the financial stream can opt for online finance courses as well. Below are some of the key concepts of financial management discussed by our experts at CL King and Associates that a professional has to keep in mind while taking care of an organization's financial operations.


Cash Management

Cash management is aimed at ensuring that the organization always maintains enough resources to meet its financial requirements on time. A cash deficit can cause serious damage to the organization in the form of disrepute and delay in operations. Effective cash management means managing the accounts receivable and accounts payable properly.


Capital Structure

A growing company requires funds to meet its various expenses. Sometimes it sources this capital from outside investors. The capital is needed by the company to expand its presence or fund its operations etc. The financial function is also responsible for determining which form of capital is best for their business. It could be in the form of debt or equity or even a combination of both types of capital. A financial manager also decides how much of capital is needed and at what time of the organization's life cycle.


Financial Reporting

Timely and accurate reporting is crucial for a business to understand where it stands and accordingly plan for the future. Reporting requires determining all the key information points which are needed for decision making within the organization. Finance professionals design the reports that contains this information which is tracked in a detailed manner on a daily, weekly, monthly or yearly basis depending on the relevance of that metric.


Planning and Forecasting

One of the key elements of financial management is to effectively forecast the company's revenues, expenses and net profits. This forecast is used for future planning for the company. Forecasting accurately requires a good knowledge of the company's environment, its competitors and market dynamics.

In essence, financial management takes care of the critical processes in an organization and are instrumental in the smooth functioning of the business.


Also read: Make Money in Corporate Finance

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